A customer of a bank is an established art dealer. Within KYC due diligence processes, which constitutes a triggering event that requires ongoing due diligence on this client?
Click on the arrows to vote for the correct answer
A. B. C. D.A
The correct answer is B. The customer keeps adding artwork service providers to the payment beneficiary list.
Explanation: KYC (Know Your Customer) is an essential process that banks must follow to identify and verify their clients' identity, assess potential risks, and monitor their transactions to detect and prevent money laundering and terrorist financing.
The question asks which of the given events constitutes a triggering event that requires ongoing due diligence on an established art dealer client. A triggering event is an occurrence that may indicate a change in the client's risk profile and necessitate enhanced or ongoing due diligence to assess potential money laundering or terrorist financing risks.
Option A, where the owner wants to exchange foreign currency for overseas travel, is a routine transaction that does not trigger ongoing due diligence.
Option C, where the customer starts an art selection consulting service, may change the client's business model, but it may not necessarily require ongoing due diligence, as it does not pose an immediate money laundering risk.
Option D, where the customer moves headquarters to China and opens a branch in Malaysia, may be a significant event, but it may not require ongoing due diligence unless it poses a substantial risk or indicates changes in the client's business practices that pose a money laundering risk.
Option B, where the customer keeps adding artwork service providers to the payment beneficiary list, is a red flag that may indicate a change in the client's business practices, and it may pose an increased risk of money laundering. Ongoing due diligence may be necessary to assess the legitimacy of the artwork service providers and the purpose of the payments to prevent money laundering.
Therefore, the correct answer is B, The customer keeps adding artwork service providers to the payment beneficiary list, which constitutes a triggering event that requires ongoing due diligence on the established art dealer client.